Whenever there is any cricket match whether involving the Indian team or IPL, the madness is clearly visible. But have you ever wondered, how is the income of many foreign players like Angelo Mathews, David Warner etc or even umpires is taxed in India? Not only cricket, but many international players regularly visit India for tournaments from all sports like football, hockey, boxing, and the list is endless.
This is where, Section 194E plays a vital role, as it specifically targets income earned by sportsmen etc in India.
Required to deduct TDS u/s 194E
- Any person who
- Pays money to a non-resident sportsman (including an athlete) or an entertainer (who is not an Indian citizen); or
- Pays money to a sports institution or an association, an income as referred u/s 115BBA is required to deduct tax at source u/s 194E.
- This section provides a special tax rate @ 20% (plus EC and SHEC), Plus Surcharge as applicable on specified income arising to a Non-Resident Sportsman or Entertainer or Sports Association.
- However, no deduction for any expenditure incurred and allowance is given to such assessee u/s 115BBA.
- Specified income includes income from participating in any games/ sports/ performance or income from advertising or income from contributing articles in the newspaper. All such income should arise only in India.
Rate & time of tax deduction u/s 194E?
The rate of tax deduction u/s 194E is 20% exclusive of EC and Surcharge. And the time of deduction is earlier of, the credit of income to the account of the payee (receiver) or actual payment (in cash, cheque, draft or other modes).
